A ledger is commonly defined as an account book of entry, in which transactions are recorded. A distributed ledger is ledger that is replicated in whole or in part to multiple computers. A Cryptographic Distributed Ledger (CDL) can have at least some of these properties: irreversibility (once a transaction is recorded, it cannot be reversed), accessibility (any party can access the CDL in whole or in part), chronological and time-stamped (all parties know when a transaction was added to the ledger), consensus based (a transaction is added only if it is approved, typically unanimously, by parties on the network), and verifiability (all transactions can be cryptographically verified). A blockchain is an example of a CDL. While the description and figures herein are described in terms of a blockchain, the instant application applies equally to any CDL.
To implement the CDL, cryptographic techniques such as storing cryptographic hashes relating to other blocks may be applied. Although, primarily used for financial transactions, a blockchain can store various information related to goods and services (i.e., products, packages, status, etc.). A decentralized scheme provides authority and trust to a decentralized network and enables its nodes to continuously and sequentially record their transactions on a public “block”, creating a unique “chain” referred to as a blockchain. Cryptography, via hash codes, is used to secure an authentication of a transaction source and removes a central intermediary. The records stored on a blockchain are secured from tampering and revision due to the immutable properties created by the hashed chain. Each block contains a timestamp and a link to a previous block. A blockchain can be used to hold, track, transfer and verify information. Since a blockchain is a distributed system, before adding a transaction to a blockchain's ledger, all peers need to reach a consensus status.
One type of asset that is unique to blockchain is cryptocurrency. Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of the currency and verify the transfer of funds, operating independently of a central bank. In contrast, a fiat currency is legal tender that is typically backed by a central authority (e.g., government, etc.) Because of this, fiat currency maintains stability in its value allowing for confidence in its use in day-to-day transactions. For example, today's value of a US dollar is going to be very close to tomorrow's value. In contrast, cryptocurrency has very little stability due to the lack of a central authority. However, decentralization is critical to the implementation of blockchain. Accordingly, what is needed is a mechanism that can stabilize cryptocurrency value without relying on a central authority.